Too many people. Not enough jobs. This, in a nutshell, is the dilemma facing the U.S. economy. Thus far the federal government has focused on the "not enough jobs" part of the problem, with dismal results. Despite Washington's cash infusions, bailouts, and stimulus plans, 14.5 million Americans are unemployed today, 5 million more than when the economy collapsed in the Fall of 2008. Many of them will never find work again.

The "too many people" aspect? The government ignores it completely. Yet population growth is at the heart of our economic distress. The economy must create 125,000 jobs every month just to keep up with population growth, which is driven mainly by immigrants and their U.S.-born children.

Meanwhile, immigration policy is working against the American worker. In 2008 and 2009 2.4 million new immigrants (legal and illegal) settled in the United States even though 8.2 million jobs vanished over the same period. Figures for 2010 show the foreign-born working age population is growing five times faster than the comparable native-born population. Nearly three-quarters of the 1.2 million jobs created in 2010 went to foreign-born workers. [Bureau of Labor Statistics, The Employment Situation – December 2010, February 7, 2011. Table 7. PDF]

Historically, the federal government has done a much better job of reducing the number of job seekers than in creating jobs. The "Great Wave" of mass immigration in the late nineteenth and early twentieth centuries was ended first by World War I and, in the 1920s, by federal immigration legislation. The restrictionist policies capped legal immigration at between 50,000 and 160,000 per year over much of the next 40 years. As the immigrant share of U.S. population fell, economic conditions of ordinary native-born Americans rose. Groups that had been displaced by immigrants—blacks and uneducated whites—were sought after, used, and paid. The distribution of income became less uneven and more egalitarian.

Every economic, fiscal, and social problem we face is negatively impacted by immigration. This report analyzes the benefits of a proposed 40-year immigration hiatus on several of them. Key findings include the following:

Fiscal deficits

Everyone agrees spending must be cut. But where? Well, not Medicare, not Social Security, not infrastructure. After years of railing against government spending, the Republican leadership hasn't named a single specific program they actually want cut. Our research shows that immigrants receive more benefits than they pay in taxes, i.e., they worsen the deficit problem. An immigration moratorium would cut future deficits by hundreds of billions of dollars without cutting benefits to natives or immigrants already in the country.

The most expensive anti-poverty program, Medicaid, finances medical care for uninsured poor families with children. Because most immigrants lack the skills required for middle-class jobs—jobs that provide health insurance coverage—they receive Medicaid at greater rates than natives. We estimate that about one-tenth of all Medicaid spending goes to immigrant households. By mid-century, if current immigration policies remain in effect, that share will rise to 14 percent. A 40-year moratorium would cut the immigrant share by nearly two-thirds, to roughly 5 percent. President Obama's health care reform expands Medicare eligibility to millions of "near poor" households—a disproportionate share of them headed by immigrants.

This total includes an estimated 1.1 million illegal immigrant children. A moratorium will impact school enrollment more than it will population. That is because the group most affected by immigration policy—Hispanics—account for a disproportionate share of school enrollment. K-12 spending will be nearly $300 billion (2008 dollars) below the level needed in 2050 under current immigration policy.

Once the legal and regulatory barriers are met the money filters down to politically well-connected contractors. They have the personnel and the equipment—and will bid on the federal contract.

But these companies are already working on existing projects. They will get to the new project when they get to it. Yes, our infrastructure is in bad shape. But if money was the problem, there would be no problem.

Infrastructure spending cannot keep pace with the demands placed on it by population growth. A moratorium could help close the gap between the infrastructure demand and supply.

Wages

If immigration continues at current levels, new immigrants and their children will account for all U.S. labor force growth between 2010 and 2050. The resulting wage loss to natives and earlier immigrant cohorts will occur regardless of whether the new arrivals are legal or illegal, temporary or permanent.

By contrast, a 40-year moratorium will reduce the immigrant share of the labor force and raise native wages. We project workers in Nevada, Georgia, Maryland, and New Jersey will experience the largest percentage wage growth under a moratorium.

Population growth

Under current immigration policy, immigrants and their U.S.-born children will account for about 80 percent of U.S. population growth between 2010 and 2050, according to the Census Bureau. A 40-year moratorium on new immigrants would reduce 2050 population by 116 million, or 26 percent, below the level that would have been reached under current policy. Instead of 439 million, U.S. population in 2050 would be 323 million. In three states—Florida, Texas, and California—a moratorium will reduce 2050 population by 10 million below current policy levels.

The Great Recession is over. Economists say it ended in June 2009 when the U.S. economy started to grow. Immigration undoubtedly helped turn things around: more workers and more people mean a larger GDP.